Investment Strategy

There are three reasons to invest. First, to hedge or protect from the things we spend money on and those costs escalating out of control. The second reason is to diversify income, diversify the ways in which wealth is created. The third reason is to take that income and use it to create more value. We believe in an investment approach that starts with allocating assets weighted toward need sectors, with income diversification layered on top. Here is a quick look at what this means:

Identify sectors that represent what people need in a more durable way like shelter, energy, health care, food.

Identify cyclical sectors for active management.

Follow the technological evolution of needed sectors.

Layer in Global investing to diversify home country bias and dollar risk.

Diversify the method of wealth-building: dividends, interest, royalties, premiums, rent, return of capital to go along with growth.

Customize according to client nature, needs, wants and goals.

Need sectors are those that represent what we need to survive: shelter, energy, healthcare, and food. These have always been and will always be human needs though what they look like evolves. For example the healthcare world was once dominated by pharmaceuticals but now it’s focused on biotechnology and moving in the direction of nutrition and wellness. The energy sector was mostly oil and natural gas but now it’s focused on wind, solar, and fuel cells. Real Estate, (shelter), used to be about buying houses or office buildings, but it evolved to be about malls and shopping centers and on to recreation areas and resorts. The food industry is less about corporate farming and more about local production. The drivers of need sector evolution are technological advances, not to be confused with the tech sector, and we follow these advances so that we can see new opportunities that arise. Though technological developments cause these core needs to shift, the needs themselves remain constant. This is why we weight asset allocation toward this sector.

Cyclical sector investments require active management because they are based on trends, what we think we want right now. This is fashion, vehicles, trendy investments, and they change relatively quickly. The financial world has its patterns. By identifying these patterns and cycles you can endeavor to make the best of the opportunities they provide, and it takes an active manager, one who is paying attention, to do this.

The US dollar is not the only currency out there, and we believe that though currencies fluctuate over time, they will stabilize relative to one another. By layering global investing into your strategy, you diversify home country bias and dollar risk. When some currencies are up, others are down which can help inform what to buy, what to sell, and when. Adding global investing to your strategy helps us help you make the most of the opportunities that come from fluctuating currencies. Take a look at this 2013 article about US dollar expectations for a deeper illustration.

Our approach looks at diversifying income as well as investments. In addition to growth, income can be in the forms of dividends, interest, royalties, premiums, rent, and return of capital. It’s important to see these for what they are so that you may have a total, all-inclusive perspective of your finances. We don’t rely on the “greater fool theory,” meaning buying something somewhat questionable because there is likely someone else who’ll pay you more for it as it’s unreliable. Additionally, compounding income through reinvestment of income, capital gain distributions, and savings is what Einstein was referring to when he said that compound interest was the most powerful force in the universe.

Lastly, we are able to customize your particular strategy so that you may trulyevolve with your money. If, for example, when investing in energy you prefer to invest in solar or other alternative sources rather than oil, we can find the most appropriate options for you. Your beliefs and values are honored; because money is a source of energy for you it must be positive energy, you should feel good about your investments. It almost goes without saying that your nature is also taken into consideration, and your financial plan will not ask you to ignore nor forsake your nature.

It’s more than “buy low, sell high” though that does have something to do with it. The ingredients of a solid strategy include understanding needs vs. wants, value vs. growth, cost vs. value, US vs. international, and how to identify and use the products, tools, and patterns available through connected active management.

The LPL Financial Registered Representatives associated with this site may only discuss and/or transact securities business with residents of the following states: ME, AZ, SC, CT, FL, IL, MA, NH, NJ, NY, OH, VA, and WA.